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148 THE PRACTICE OF ENTREPRENEURSHIP

pharmaceutical industry. In Sweden, ASEA, founded in 1884 and for
the last sixty or seventy years a very big company, is a true innovator
in both long-distance transmission of electrical power and robotics
for factory automation.
To confuse things even more there are quite a few big, older busi-
nesses that have succeeded as entrepreneurs and innovators in some
fields while failing dismally in others. The (American) General
Electric Company failed in computers, but has been a successful
innovator in three totally different fields: aircraft engines, engineered
inorganic plastics, and medical electronics. RCA also failed in com-
puters but succeeded in color television. Surely things are not quite as
simple as the conventional wisdom has it.
Secondly, it is not true that “bigness” is an obstacle to entrepre-
neurship and innovation. In discussions of entrepreneurship one hears
a great deal about the “bureaucracy” of big organizations and of their
“conservatism.” Both exist, of course, and they are serious impedi-
ments to entrepreneurship and innovation—but to all other perform-
ance just as much. And yet the record shows unambiguously that
among existing enterprises, whether business or public-sector institu-
tions, the small ones are least entrepreneurial and least innovative.
Among existing entrepreneurial businesses there are a great many
very big ones; the list above could have been enlarged without diffi-
culty to one hundred companies from all over the world, and a list of
innovative public-service institutions would also include a good
many large ones.
And perhaps the most entrepreneurial business of them all is the
large middle-sized one, such as the American company with $500
million in sales in the mid-198Os.* But small existing enterprises
would be conspicuously absent from any list of entrepreneurial busi-
nesses.
It is not size that is an impediment to entrepreneurship and innova-
tion; it is the existing operation itself, and especially the existing suc-
cessful operation. And it is easier for a big or at least a fair-sized com-
pany to surmount this obstacle than it is for a small one. Operating
anything—a manufacturing plant, a technology, a product line, a dis-
tribution system—requires constant effort and unremitting atten-

*This has long been suspected. Now, however, conclusive evidence is available
in the study of one hundred medium-sized “growth” companies by Richard E.
Cavenaugh and Donald K. Clifford, Jr., “Lessons from America’s Mid-Sized Growth
Companies,” McKinsey Quarterly (Autumn 1983).